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post #1 of 2 (permalink) Old 11-05-2007, 01:00 AM Thread Starter
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Building Brand China

Building Brand China
By Melissa Chan in Beijing

A centralised political system is driving the engine of economic growth in the country [EPA]

Within a matter of weeks, China's economy is forecast to overtake Germany and become the third largest in the world.

Over the past three decades, China's GDP has surged by an average of about 10 per cent a year, fuelled in large part by a surge in export manufacturing that has earned it the title "factory of the world".

According to recent figures, China churns out about 10 per cent of the world's output, a figure that's expected to double by 2015.

The most evident explanation for China's manufacturing success is its cheap and abundant supply of labour.

But that is just one cog in China's vast economic machine.

Plenty of other countries, like India, can also boast a large, low-cost workforce. So what keeps China ahead of its neighbours?

Driving force

The driving force is a central government with all the power - a system where politics is not bogged down by free discussion.

An executive decision made in Beijing can quickly produce new roads and railways to move products for export, or set up set up special industrial zones to attract manufacturers.

"So many of us produce high-quality products and have done so for so long.
You can't condemn an entire industry because of a few bad cases"
Jia Shan, factory manager

And it can all happen very quickly.

At the Kai Jia food factory in Shandong province the managers proudly showed us what the 'Made in China' label means.

The production line is modern and efficient - the model of modern Chinese industry.

Jia Shan, the factory's manager, acknowledges that the recent string of Chinese product safety scares has caused some worry.

But he insists his factory, like most in China, abides by international standards.

"I think the media coverage has been unfair," he says.

"So many of us produce high-quality products and have done so for so long. You can't condemn an entire industry because of a few bad cases."

Over the past few months, the government has made unusually public moves to allay international fears, worried that the scares would undermine global demand for Chinese products.

But Jiang Zong Liang, a Shandong food safety inspector, says that the momentum is still there, and still going strong.

"The international media coverage over product safety has certainly affected the manufacturing industry," he told Al Jazeera. "But not in terms of export and production numbers."

Rising exports

Indeed, despite widespread publicity over recent safety concerns, orders this Christmas for Chinese-made toys have actually increased.

China will soon overtake Germany to become the
world's third largest economy [Reuters]
In any case, as China's economy continues to surge ahead, the country's manufacturing industry increasingly serves not just the export market, but also domestic consumers.

With a home market of over one billion consumers, Chinese manufacturers are sitting on a vast potential.

But as Chinese businesses manufacture for their own consumers and the outside world, made in China is fast becoming made for China.

As Chinese become wealthier, they are becoming hungry for new products.

"When we think about supplying products to those more affluent, urban consumers then there’s potential that it could be sourced from places outside of China," says Craig Watts of the Cheung Kong Graduate School of Business.

"And what it means is that China isn't necessarily at the bottom of the food chain anymore."

What this translates into is a steady shift in international trade.

China may now be seen as the factory of the world - but increasingly the time will come when factories in Europe, Africa and North America hum away for the benefit of Chinese customers.

Source: Al Jazeera
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post #2 of 2 (permalink) Old 11-05-2007, 05:51 AM
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Last Updated: Monday, 5 November 2007, 11:48 GMT
From BBC News
PetroChina is world's top company

China is the world's second largest oil consumer

Chinese oil firm PetroChina has trumped US rival Exxon Mobil to become the world's biggest firm by market value on its first day of trading in Shanghai.
PetroChina saw its shares nearly triple in early trade from 16.7 yuan to end at 43.96 yuan, giving PetroChina a market value of about $1 trillion (£480.6bn).
This is almost the twice the $488bn value of oil producer Exxon Mobil.
But some analysts said the PetroChina's Shanghai share price stemmed from speculation and was too high.
State-owned PetroChina already has shares traded in Hong Kong and its flotation on China's mainland stock exchange in the country's largest domestic share sale represented just 2% of the total number of shares it has listed.
The opening price is really too high as far as PetroChina's corporate fundamentals are concerned

Wang Jing, an analyst at Orient Securities

Is China's bull market sustainable?

The fervent interest in the company underscores investor confidence in China's booming economy.
The Chinese stock market soared past the UK as the world's third largest by value after PetroChina's $9bn Shanghai listing. The market has gained 110% already this year.
Market bubble?
In terms of profit though, Asia's top oil and gas producer does not even make it into the world's top 50 companies, which some analysts say should sound alarm bells about the firm's valuation.
Its current share price is 60 times the amount it expects to earn per share over the next 12 months. This is far above the global average forecast by oil producers, which is 18 times current earnings.
Many expected the stock to open at about 35 yuan.
World's largest firms
PetroChina: $1 trillion
Exxon Mobil: $488bn
General Electric: $407.5bn
Microsoft: $346.71bn
BP: $250bn

"The opening price is really too high as far as PetroChina's corporate fundamentals are concerned," said Wang Jing, an industry analyst at Orient Securities in Shanghai.
This view that at 60 times its earnings per share PetroChina is too pricy was reinforced by international investors taking profit in the firm's Hong Kong shares, which fell 8.2% to 18 Hong Kong dollars.
Oil price
Other analysts observed that surging world oil prices, which touched the $96 level in New York on Friday, had been beneficial for the firm's debut, particularly with China raising fuel prices by 10% last week.
But petrol prices are controlled from Beijing, which has historically used its power to shield consumers from inflation and prevent any resultant social unrest. Dong Yong at Haitong Securities warned that in the future, high crude prices could actually become negative for the oil and gas producer if it finds it is not being compensated for the high costs to its large refinery operations. PetroChina, owned by China National Petroleum, said it will use the money to fund expansion of its Chinese oil fields.
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